Coming soon to your mailbox: Government misinformation

My annual Social Security Statement arrived recently. Right there on the front page under the heading. “About Social Security’s future” is another example of how the administration is spending taxpayer dollars to push misleading, even downright false information. While senior officials from the Social Security Administration barnstorm the country to help promote the president’s plan to privatize Social Security, a more subtle part of the campaign package is arriving in our mailboxes.

In 2004, the Bush administration spent $88 million on public relations, up 128% from 2000. Government agencies have paid pliable columnists to pitch for administration policies on education and social issues. The administration has been caught passing off phony, pre-packaged news videos as if they were real reports by real journalists. The General Accounting Office concluded that two of these ersatz reports crossed the line into illegal, covert propaganda. It’s not just inappropriate, it’s illegal for an administration to use taxpayer dollars to try to manipulate public opinion like this.

In January, a 31-year veteran with the Social Security Administration testified at a Senate hearing that frontline agency workers are instructed “to promote the idea that Social Security is in crisis and that Social Security privatization is the answer.” She said this is the first time career employees had been asked to take sides in a major political controversy. And, a few weeks ago, House Democrats released a report demonstrating how the Social Security Administration — which is supposed to be nonpartisan — has systematically changed its publications to undermine public confidence and press for changes.

Which takes us back to the Social Security Statements mailed to millions of workers to help them plan for retirement. It claims the system is “facing serious future financial problems” and “action is needed soon to make sure the system is sound.” It also blames demographics, falsely asserting that our economy cannot maintain future scheduled benefits.

While the administration has been generating a false sense of crisis, it has failed the first test of leadership: to present a plan that addresses the problem.

The administration’s only clear proposal so far-private accounts-would do nothing to make Social Security more solvent.

An expert at a recent White House briefing on privatization admitted as much. Private accounts actually make things worse, not better, requiring trillions in new borrowing and diverting money that would otherwise pay current beneficiaries.

Here’s a little-known fact that you won’t find in your Social Security Statement: the trust fund is actually more solvent today than it has been in years and it keeps improving. According to the Congressional Budget Office, there is ample money to pay 100% of scheduled benefits until today’s high schoolers are nearing retirement. After that, Social Security can pay 78% of scheduled benefits, which (because benefits rise over time) is higher than those being paid today. The rest of government’s finances should be so strong.

But what about demon demographics? Rising longevity and aging baby boomers aren’t news. While demographics are easy to blame, that argument pits younger workers against the elderly in a zero-sum game. That’s not just wrong, it’s inaccurate. Research finds that the most significant reason for the shortfall is increasing wage inequality.

Because wage growth has been slower than predicted-especially for low and middle- income workers-Social Security collected less revenue than expected. At the top of the wage scale, where most of wage growth has been concentrated, Social Security taxes are only collected on the first $90,000 of wages. Even though that cap rises annually to reflect increases in average wage growth, faster-than-average growth at the top has put 15% of all wages above the cap — up from 10% in 1983. In other words, when the rich get richer and the poor get poorer, Social Security’s finances suffer.

Serious and balanced proposals to address the long-term shortfall should be carefully considered. But, we should not rush to displace this important program that has kept millions of retirees, workers, and families out of poverty with a program that puts these same individuals at risk.

President Bush’s State of the Union warned that some would try to mislead us about Social Security and urged us not to buy their story. Let’s follow that advice.

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EPI is an independent, nonprofit think tank that researches the impact of economic trends and policies on working people in the United States. EPI’s research helps policymakers, opinion leaders, advocates, journalists, and the public understand the bread-and-butter issues affecting ordinary Americans.